Macquarie Group, Ltd. · ASX:MQG
Macquarie — 20th CLSA Investors' Forum 2013
58 slides from Macquarie's conference presentation, Sep 23, 2013
Slide 1: Investor presentation and outlook update
Macquarie Group Limited ABN 94 122 169 279 No.1 Martin Place Telephone (61 2) 8232 3333 Sydney NSW 2000 Facsimile (61 2) 8232 7780 GPO Box 4294 Internet http://www.macquarie.com.au Sydney NSW 1164 AUSTRALIA For personal use only ASX/Media Release Investor presentation and outlook update SYDNEY, 23 S
Slide 2: 20th CLSA Investors' Forum
For personal use only M Macquarie i GGroup Li Limited it d 20th CLSA Investors’ Forum 24 25 September 2013 24-25 Patrick Upfold, Chief Financial Officer Karen Khadi, Head of Investor Relations
Slide 3: Disclaimer
Di l i Disclaimer For personal use only The material in this p presentation has been p prepared p by y Macquarie q Group p Limited ABN 94 122 169 279 ((“Macquarie”) q ) and is g general background g information about Macquarie’s activities current as at the date of this presentation. This informatio
Slide 4: Contents
Contents For personal use only P Page 1. About Macquarie 4 2. 2013 Full Year Result 11 3 3. 1Q14 Update U d t 17 4. Outlook 25 5. Appendix: FY13 Result Analysis and Financial Management 30 6. Appendix: Additional Information – Funding 44 7. Appendix: Additional Information – Capital 51 PAGE 2
Slide 5: About Macquarie
For personal use only About Macquarie
Slide 6: About Macquarie
Ab t Macquarie About M i For personal use only 1 Founded in 1969, 1969 Macquarie employs over 13 13,600 600 people in over 28 countries • Macquarie q Group p ((Macquarie) q ) is a g global p provider of banking, financial, advisory, investment and funds management services • Macquarie’s main busines
Slide 7: Macquarie Funds Group
About Macquarie Macquarie Funds Group For personal use only Top 50 global asset manager with $A379b1 of assets under management • Provides clients with access to a diverse range of capabilities and products, Macquarie Funds Group i l di including: • Infrastructure and real asset Macquarie Macquarie
Slide 8: Corporate and Asset Finance Group
About Macquarie Corporate and Asset Finance Group For personal use only 3b1 of loans and assets under finance $A24.3b $A24 • Delivers tailored finance and asset Lending Aircraft management solutions to clients through Portfolio: $A8.6b2 Portfolio: $A3.6b th cycles the l Rail • Specialists in corpora
Slide 9: Banking and Financial Services Group
About Macquarie Banking and Financial Services Group For personal use only Retail deposits exceed $A32b1 • ~1.1 million high net worth clients serviced Wrap Cash by 590 Macquarie client advisers and our I d Independent d t Fi Financial i l Ad Adviser i partners t • Leading provider of retail advisor
Slide 10: Macquarie Securities Group
About Macquarie Macquarie Securities Group For personal use only • Global institutional securities house with Equity capital Research strong Asia-Pacific foundations covering markets sales, research, ECM, execution and Corporate derivatives activities Macquarie Access Execution Securities • Full Ful
Slide 11: Macquarie Capital
About Macquarie Macquarie Capital For personal use only • Global corporate finance capability, FINANCIAL INSTITUTIONS TAL MARKETS CQUISITIONS AL MARKETS including M&A, capital markets and ESTMENTS DEBT CAPITAL MARKETS principal investments INDUSTRIALS • Key specialities: infrastructure, utilities an
Slide 12: Fixed Income, Currencies and Commodities
About Macquarie Fixed Income, Currencies and Commodities For personal use only A portfolio of businesses across Commodity and Financial markets • Global fixed income, currencies and Metals and energy capital Energy markets commodities provider of finance, risk solutions l ti andd market k t access t
Slide 13: 2013 Full Year Result
For personal use only 2013 Full Year Result
Slide 14: Diversified by region
Diversified by region International income1 63% of total Total staff 13,663; International staff 55% of total For personal use only EUROPE, MIDDLE EAST ASIA AMERICAS & AFRICA2 Income: $A1,221m (19% of total) Income: $A743m (11% of total) Income: $A2,199m (33% of total) , Staff: 1,193 , Staff: 3,093
Slide 15: Diversified income
Diversified income Net operating income by region For personal use only • 63% of operating income1 in FY13 is generated offshore • FX translation estimated to have a minimal impact on the FY13 result compared to FY12 $Am 1,600 2H11 1H12 1,400 2H12 1,200 1H13 1,000 2H13 800 600 400 200 0 Australia As
Slide 16: Financial performance
Financial performance Full-year ended 31 March 2013 For personal use only FY13 Operating p g income of $A6,700m , FY13 Profit of $A851m FY13 down 4% on FY12 FY13 up 17% on FY12 $Am 2H13 up 18% on 1H13 $Am 2H13 up 36% on 1H13 800 4,000 400 2,000 0 0 1H11 2H11 1H12 2H12 1H13 2H13 1H11 2H11 1H12 2H12 1
Slide 17: Result reflected improved 2H13 market conditions
R Result lt reflected fl t d iimproved d 2H13 market k t conditions diti For personal use only FY13 vs FY12 2H13 vs 1H13 Operating income $A6.7b 4% $A3.6b 18% O Operating ti expenses $A5 3b $A5.3b 10% $A2 7b $A2.7b 7% Operating profit before tax $A1.4b 34% $A888m 72% Tax expense $A533m 86% $A377m 14
Slide 18: FY13 Result by operating group
FY13 Result by operating group FY13 VS FY12 For personal use only Operating Income Net Profit Contribution Macquarie Funds Group $A1.5b 7% $A0.8b 17% -style Annuity- Corporate and Asset Finance $A1.0b 2% $A0.7b 1% A Banking and Financial Services $A1.4b 1% $A0.3b 22% From loss Macquarie Securities $
Slide 19: 1Q14 update
For personal use only 1Q14 update
Slide 20: 1Q14 Macquarie Update
1Q14 M Macquarie i UUpdate d t For personal use only • 1Q14 operating groups’ contribution1 ahead of subdued pcp (1Q13) and prior quarter (4Q13) • Annuity-style businesses2 up on pcp and prior quarter, with a strong performance from MFG • Capital markets facing businesses3 up significantly on a subd
Slide 21: Annuity-Style Businesses 1Q14 Update
Annuity-Style Businesses 1Q14 Update U d t For personal use only • AUM increased 10% to $A379.3b1 in 1Q14, mainly driven by FX movements and investment of MIRA funds, Macquarie partially offset by negative market movements and MIRA asset disposals • Strong 1Q14 performance fees of $A65m, $A65m predo
Slide 22: Market Facing Businesses 1Q14 Update
Market Facing Businesses 1Q14 U Update d t For personal use only • Modest improvement in global market volumes however ECM markets, whilst improved on pcp, Macquarie remain i subdued bd d Securities • No.1 ranking in US and UK/European client surveys for Australian equities1, No.1 market share in Si
Slide 23: Funded balance sheet remains strong
Funded balance sheet remains strong For personal use only $Ab 31 March 2012 $Ab 31 March 2013 $Ab 30 June 2013 100 100 100 90 90 90 ST wholesale issued paper (11%) ST wholesale issued paper ST wholesale issued paper (6%) Cash and liquid (7%) assets (22%) 80 80 80 Other debt maturing1 in the Other de
Slide 24: Stable Basel III surplus
St bl B Stable Basell III surplus l For personal use only • APRA Basel III Group capital of $A13.4b1, Group surplus of $A2.8b2 at Jun 13 • In May 2013 2013, APRA issued its draft rules for Conglomerates Conglomerates. Whilst the rules are yet to be finalised finalised, our current assessment is that
Slide 25: MBL long term ratings stability
MBL long term ratings stability MBL has maintained its S&P rating for 22 years For personal use only Standard & Poor’s Ratings g Movements from 1 May y 2007 nt (notches) AA+ AA AA- ating movemen A+ JPMorgan A Chase Bank Macquarie UBS AG Deutsche Bank of Citibank Morgan Barclays A- Bank Credit Suisse
Slide 26: Impacts of movements in AUD
I Impacts t off movements t in i AUD For personal use only Income statement Balance sheet & capital ratios 63% of operating income is generated Foreign currency denominated assets and offshore1 liabilities are appropriately hedged to minimise the impact p of foreign g exchange g movements on income
Slide 27: Outlook
For personal use only Outlook
Slide 28: Short term outlook
Sh t tterm outlook Short tl k For personal use only • Summarised below are the outlook statements for each Operating Group • FY14 results will varyy with market conditions,, particularly p y the capital p markets facing g businesses which continue to experience subdued market conditions Net profit c
Slide 29: Short term outlook
Sh t tterm outlook Short tl k For personal use only • Since our FY13 result announcement on 3 May 2013, there have been changes to the short term outlook for some of the operating groups: – MFG: FY14 to be up on FY13 due to base and performance fees and impact of FX – FICC: FY14 to be broadly in lin
Slide 30: Medium term
Medium term For personal use only Macquarie remains well positioned to deliver superior performance in the medium term • Deep expertise in major markets • Build on our strength in diversity and continue to adapt our portfolio mix to changing market conditions – Annuity-style Annuity style income is
Slide 31: Approximate business Basel III & ROE
A Approximate i t business b i B Basell III & ROE For personal use only APRA Basel III Capital p Approx. FY13 Return Operating Group @ 8.5% ($Ab) on Ordinary Equity1 Annuity-style businesses Approx. 7-Year Average Return on Ordinary Equity1 Macquarie Funds Group 1.8 Corporate and Asset Finance 2.1 2
Slide 32: Appendix: FY13 Result Analysis and Financial Management
For personal use only Appendix FY13 R Result lt A Analysis l i and d Fi Financial i lMManagementt
Slide 33: Income Statement key drivers
I Income St t Statement t key k drivers di For personal use only Mar Mar • Net interest income up 3% on FY12 to $A1,367m 2H13 1H13 – Growth in finance G f lease portfolios f and interest bearing investments in 13 12 SAm $Am Macquarie Capital $Am $Am – Partially offset by reduced funding opportunitie
Slide 34: Macquarie Funds Result
Macquarie Funds R Result lt For personal use only Mar 13 Mar 12 • Base fees up 9% on FY12 to $A989m driven by: $Am $Am – Increase in AUM (up 6%) largely as a result of favourable market movements and transfer of Professional Series from BFS Base fees 989 905 – Increase in EUM (up 8%) as a result of
Slide 35: Corporate and Asset Finance Result
Corporate and Asset Finance R Result lt For personal use only • Net interest and trading income broadly flat on FY12 Mar 13 Mar 12 $Am $Am – Growth in loan and finance lease portfolios (up 9%) with particularly strong growth in motor vehicles Net interest and trading income1 579 586 – Offset by incr
Slide 36: Banking and Financial Services Result
Banking and Financial Services R Result lt For personal use only • Net interest and trading income up 4% on FY12 Mar 13 Mar 12 $Am $Am – Retail deposits up 7%, improved volumes in Relationship Banking – Partially offset by lower loan portfolio due to the sale/run off of legacy Net interest and tradi
Slide 37: Macquarie Securities Result
Macquarie Securities R Result lt For personal use only • Cash equities business profitable in FY13 Mar 13 Mar 12 $Am $Am – Brokerage and commission income down 14% on FY12 reflecting weak market conditions, offset by increased volumes in the 4th Brokerage and commissions 450 525 quarter, improved cl
Slide 38: Macquarie Capital Result
Macquarie Capital R Result lt For personal use only Mar 13 Mar 12 • Fee and commission income down 5% on FY12 $Am $Am – Continued subdued market conditions leading to lower advisory and ECM income partially offset by improved DCM/Debt Advisory income Fee and commission income 542 573 – Advisory and
Slide 39: Fixed Income, Currencies and Commodities Result
Fixed Income, Currencies and Commodities R Result lt For personal use only • Commodities trading income up 24% on FY12 Mar 13 Mar 12 $Am $Am – Energy markets experienced strong customer flow across the global platform, particularly in the oil business Commodities1 713 573 – Agricultural markets bene
Slide 40: Balance sheet highlights
B l Balance sheet h t highlights hi hli ht For personal use only • Balance sheet remains strong and conservative – Term assets covered by term funding, stable deposits and equity – Minimal reliance on short term wholesale funding markets • Surplus funding continues to be deployed whilst maintaining
Slide 41: Conservative long standing liquidity risk management framework
Conservative long standing liquidity risk managementt framework f k For personal use only Liquidity Policy • The key requirement of MGL and MBL’s liquidity policies is that the entities are able to meet all liquidity obligations on a daily basis and during a period of liquidity stress: – a minimum t
Slide 42: Well diversified funding sources
W ll di Well diversified ifi d ffunding di sources For personal use only Diversity of MGL funding sources MGL term funding (drawn and undrawn1) maturing beyond one year (including Wholesale equity and hybrids) issued paper Deposits - corporate & Equity & hybrids wholesale $$Ab Equity & hybrids Loan
Slide 43: Continued deposit growth
C ti Continued dddeposit it growth th For personal use only • Macquarie has been successful in pursuing its strategy of diversifying its funding sources through growing its deposit base – Represents in excess of 40% of the Group’s funding sources – 600,000+ retail depositors – Focus on the compositi
Slide 44: Loan portfolio growth
Loan portfolio1 growth F d d Balance Funded B l Sheet Sh t For personal use only Mar 13 Mar 12 Category $Am $Am Mortgages: Australia 6.8 3.0 United States 07 0.7 07 0.7 Canada 6.7 8.2 Other 0.2 0.1 Total mortgages 14.4 12.0 Structured investments 3.6 2.9 Banking 4.0 4.0 Real Estate 2.3 1.8 Resources
Slide 45: Equity investments of $A5.2b
E it investments Equity i t $A5 2b1 t off $A5.2b For personal use only Carrying Carrying value2 value2 Mar 13 Mar 12 Category $Am $Am Description Macquarie Funds (MIRA) 1,143 871 Macquarie Atlas Roads, Macquarie SBI Infrastructure Company, Macquarie managed d ffunds d I f t t Infrastructure Company,
Slide 46: Appendix: Additional Information - Funding
For personal use only Appendix Additi Additional l IInformation f ti - Funding F di
Slide 47: Group funding structure
G Group funding f di structure t t For personal use only • MGL and MBL are the Group’s two primary external funding vehicles which have separate and distinct funding, capital and liquidity management arrangements • MBL provides funding to the Bank Group • MGL provides funding predominantly to the No
Slide 48: Funded balance sheet reconciliation
F d db Funded balance l sheet h t reconciliation ili ti For personal use only • The Group’s statutory balance sheet is prepared based on generally accepted accounting principles which do not represent actual funding requirements • A funded balance sheet reconciliation has been prepared to reconcile
Slide 49: Funding for the Group March 2013
Funding for the Group 31 M March h 2013 For personal use only Mar 13 Mar 12 • Well diversified funding sources $Ab $Ab Funding sources • Minimal reliance on short term wholesale funding Negotiable certificates of deposits 1.4 1.7 markets Commercial paper 3.5 4.6 Net trade creditors - 0.2 • Deposit b
Slide 50: Funding for the Bank Group March 2013
Funding for the Bank Group 31 M March h 2013 For personal use only Mar 13 Mar 12 • Bank balance sheet remains very liquid, well capitalised $Ab $Ab and with a diversity of funding sources Funding sources Negotiable certificates of deposits 1.4 1.7 • Term funding beyond one year (excluding equity) ha
Slide 51: Funding for the Non-Bank Group March 2013
Funding for the Non-Bank Group 31 M March h 2013 For personal use only Mar 13 Mar 12 • Non-Bank Group is predominantly term funded $Ab $Ab Funding sources • Term funding beyond one year (excluding equity) has a Structured notes 1.0 0.6 weighted average term to maturity of 5.9 years Secured funding 0
Slide 52: Explanation of Funded Balance Sheet reconciling items
Explanation of Funded Balance Sheet reconciling ili items it For personal use only • Self funded trading g assets: Macquarie q enters into stock borrowing g and lending g as well as repurchase p agreements g and reverse repurchase agreements in the normal course of trading activity that it conducts
Slide 53: Appendix: Additional Information - Capital
For personal use only Appendix Additi Additional l IInformation f ti - Capital C it l
Slide 54: Macquarie Group Basel III regulatory capital surplus calculation
Macquarie Group Basel III regulatory capital S l calculation Surplus l l ti For personal use only Harmonised APRA Basel III Basel III $Am $Am 31 March 2013 Macquarie Group eligible capital: Bank Group Gross Tier 1 capital 8 955 8,955 8 955 8,955 Non-Bank Group eligible capital 3,993 3,993 Eligible c
Slide 55: Harmonised Basel III regulatory capital - Bank Group contribution
Macquarie Group Harmonised Basel III regulatory capital - Bank Group contribution For personal use only Risk-weighted Ri k i ht d Tier 1 Ti Capital C it l assets Deductions Requirement1 31 March 2013 $Am $Am $Am Credit risk On balance sheet 31,594 2,211 Off balance sheet 11,102 777 Credit risk total
Slide 56: Macquarie Group regulatory capital - Non-Bank Group contribution
Macquarie Group regulatory capital – Non Bank Group contribution Non-Bank For personal use only • APRA has specified a regulatory capital framework for MGL • A dollar capital surplus is produced; no capital ratio calculation is specified • APRA has approved Macquarie’s Economic Capital Adequacy Mode
Slide 57: Macquarie Group regulatory capital - Non-Bank Group contribution
Macquarie Group regulatory capital – Non Bank Group contribution Non-Bank For personal use only Capital Assets Requirement Equivalent Risk 31 March 2013 $Ab $Am Weight Funded assets Cash and liquid assets 1.8 20 14% Loan assets1 1.4 149 133% A Assets t held l 2 h ld ffor sale - Debt investment secur
Slide 58: 20th CLSA Investors' Forum
For personal use only M Macquarie i GGroup Li Limited it d 20th CLSA Investors’ Forum 24 25 September 2013 24-25 Patrick Upfold, Chief Financial Officer Karen Khadi, Head of Investor Relations